Overall, this is another good set of numbers from Kohl’s. However, growth has slowed, which is a little disappointing given the softness of the prior-year numbers, when total and comparable sales were virtually flat. The period also coincided with robust consumer spending which should have provided a little more upside to the numbers than has been delivered.

Kohl’s willingness to experiment with initiatives, such as accepting Amazon returns and its potential partnership with Aldi, helps drive footfall —something all retailers need to increasingly focus on as more sales migrate to digital.

However, Kohl’s has delivered its fifth consecutive quarter of comparable sales gains. This is directly related to the various strategies management has put into place that are making stores and the offer more relevant and compelling for shoppers.

Building partnerships widens appeal

These improvements are especially noticeable in clothing, where Kohl’s has made good gains over the past year. Some of this is due to the success of high-profile national brands like Nike and Under Armour, both of which have bucked the trend of more muted demand for sporting apparel across the market as a whole. However, Kohl’s has also stepped up its own-brand development, especially in womenswear. Here we are excited by the progress of key labels like Apartment 9 and LC Lauren Conrad. These collections now look sharper and more on-trend than a year ago, and we believe they are helping to boost customer numbers and spend in the apparel category.

We see own-brand as a particularly important area of focus going forward for two reasons. First, it will help to differentiate Kohl’s from other players in the market. As Target and others have shown, having a strong own-label offering is a critical defense mechanism against rivals, especially those that play online. Second, well developed private labels will help Kohl’s to bolster margins over the medium term.

Exclusive collections with brands like Popsugar also are creating excitement and interest in Kohl’s offering, including among segments like younger consumers, who may not have traditionally shopped at Kohl’s. More of these partnerships in 2019, along with the addition of fashionable brands like Nine West, should help Kohl’s to widen its apparel audience.

Making browsing more pleasant

Kohl’s has also thinned out the ranges in stores, making the assortment easier to shop. Although stores can be messy at times, they are far less cramped and crowded with products than they once were. Not only does this make browsing more pleasant, it also elevates the proposition and allows Kohl’s to showcase key brands more effectively. The work to improve store merchandising stands in direct contrast to retailers like J.C. Penney, where consumers are still greeted by a sea of merchandise.

Although they remain small-scale in the scheme of things, we are also encouraged by Kohl’s willingness to experiment with initiatives such as accepting Amazon returns in a handful of stores and its potential partnership with Aldi. Although these might not be obvious moves, they are logical inasmuch as they help drive footfall to Kohl’s stores—something all retailers need to increasingly focus on as more sales migrate to digital.

For all our optimism about Kohl’s, we are also aware that it is moving into a period when it will be up against tough prior-year comparatives. This may well deflate growth; however, we do not believe it changes the generally positive trajectory of the company.

Neil Saunders is managing director of research firm GlobalData Retail.

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Posted by members of the Shop! Team and editorial staff of Retail Environments magazine.

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